Reliance Infrastructure Limited (RInfra) and its promoter Reliance Defence Limited (RDL) & Reliance Defence and Engineering Limited (RDEL - Pipavav), are now entrant in Defence production. They have entered into tie-ups with global OEMs - Boeing and Dassault Aviation, under Indian offset programmes for manufacturing the components of P8I LRMR and C-17 military transport aircrafts. A similar collaboration for Apache attack helicopters and Chinook heavy-lift helicopters is being worked out.
India needs to spend about $250 billion to meet its weapons and equipment requirements in the next 10 years, according to the MoD's "Long Term Integrated Perspective Plan 2012-27." As such, the country will need to hike its spending each year by 10 percent. The near term opportunities expected in for Indian industry are:
Indian Defence budget is Rs. 2,74,114 Crore for FY 2017-18, an increase of 6.2% over the last year budget. India is the largest importer of defence products accounting for 14% of the total global imports in the year 2016. Currently, about 60% of the Indian defence procurements are imported. India will have Rs. 86,000 Cr of Capital defence expenditure in the year 2017-18. This will offer large opportunities for Indian Private Sector Defence Companies, given renewed thrust by Government of India towards “Make in India” in the Defence sector.
The above offer large opportunities for Private sector, given renewed thrust by Government of India to “Make in India” in Defence sector and hence there is lot of enthusiasm in private sector to enter in this segment, including some big ones like Reliance Defence.
Initiatives by Reliance Defence
In January 2016, RInfra has acquired management control of Pipavav Defence Offshore and Engineering Company Limited (PDOECL) now renamed as Reliance Defence and Engineering Limited (RDEL). Reliance Shipyard at Pipavav has the largest Dry Dock in India. Reliance Shipyard has world class infrastructure facility to undertake all types of construction / refit / life cycle support of Warships, Submarines, Commercial vessels (including large bulk carriers), and Oil & Gas platforms/rigs.
It has received 27 industrial licenses for manufacturing of various defence hardware / equipments for Army, Navy and Air Force. This is the highest number of Industrial Licenses for any Defence Company in India. Some of them are as follows:-
|Name of the Company||Items of Manufacture|
|M/S Pipavav Shipyard Ltd.|| Types of Vessels
|M/S Pipavav Defence & Offshore Engineering Company Ltd.||
Manufacture of Assembly/Integration of Electronics Fuses and Associated Subsystems
(I). Radars (Il). Land-Based Electronic Warfare Systems, (Ill). Airborn Electronic Warfare Systems (IV). Naval Electronic Warfare Systems
Helicopters, Aircrafts and their Parts
Manufacture of Assembly and Testing of all Calibers of Ammunition Ranging from 20 Mm to 203 Mm for the Indian Armed Forces (50,000 Nos.)
|M/S Reliance Aerospace Technologies Ltd.||Manufacture of Weapon Launchers for Combat Aircraft|
|M/S Reliance Defence Technologies Pvt Ltd||Design, Development and Production of Missiles, Manufacture of Simulators for Air, Land and Naval Platforms|
|M/S. Reliance Helicopters Ltd||Manufacture of Helicopters|
|M/S Reliance Aerostructure Ltd||Manufacture And Upgrade of Airplanes and Helicopters Specially Designed for Military Application|
|M/S Reliance SED Ltd||Manufacture of all kinds of Night Vision Devices, Sensors, Navigation Systems & Surveillance Equipment|
|M/S Reliance Naval Systems Ltd||
|M/S Reliance Unmanned Systems Ltd||Manufacture of Unmanned Aerial Vehicles|
|M/S. Reliance Land Systems Ltd||Manufacture of all Terrain Combat Vehicles (ATCVs) for ArmedForces|
|M/S Reliance Propulsion Systems Ltd||Manufacture of Cryogenic Technology Based Enhanced Vision Systems for Military Application|
It has also formed several strategic partnerships and Joint Ventures with global defence majors.
|Airbus / 2011||MoU with Airbus to develop a MRO JV facility in India|
|Dassault Aviation / 2016||Agreement to establish Joint Venture (JV 51:49 in favour of Reliance), to be named Dassault Reliance Aerospace, in India to execute the offset obligations as a part of the 36 Rafale fighter Jets The JV will be supporting the IAF's Rafael programme through the production of aero structures, electronics, and components for the aircraft's Snecma M88 engines. The JV will also develop major Indian programmes with high levels of technology transfer.|
|Antonov / 2016||Agreement to form JV to manufacture transport aircraft for Military, Paramilitary Forces and also for commercial use in India and will collaborate for assembly, manufacture and MRO of Antonov series of aircraft.|
|Rafael (2016)||Reliance Defence and Rafael are setting up a 51:49 joint venture in India to produce air to air missiles, air defence systems and observation balloons. Rafael has already provided large aerostat systems to the Indian Air Force for its surveillance, reconnaissance, communication and intelligence needs. Reliance-Dassault JV gets CCI approval.|
|Sagem (2016)||The JV with Sagem is for co-development & transfer of technology for Infrared Search and Track Systems (IRST) for naval warships and combat aircraft.|
Stepping on Pedal
With focus on promoting research and development projects under the IDDM programme, an experienced team is in place to implement the plans and initiatives in Defence sector. The team comprises of more than 2,000 professionals and over 200 plus senior management executives. Leading from the front Mr Anil Ambani could be seen in Def Expo-16 and Aero-India -2017.
With eye on more than Rs. 5, 00,000 Crore of Indian Aerospace programs, it entered in Dassault Reliance JV which opens up opportunities like, lifecycle support potential, additional orders for Rafael for Indian Armed Forces under “Make in India” and potential export orders. RDEL has signed an agreement with Dassault Aviation, France, to be the key offset partner for 36 Rafael Aircraft contract. It is likely to be largest offset contract at approx. Rs 30,000 Crore. Reliance Rafale JV to create largest supply chain involving 300-400 small and medium enterprises.
Dassault Reliance JV will provide Performance Based Logistics for 50 years (scope includes maintenance, repair, overhaul and upgrades) and it is expected to execute additional orders of Rafael Fighter Aircraft, if awarded, for Indian Armed Forces under “Make in India”.
Reliance Shipyard at Pipavav has world-class infrastructure facilities, it has largest Dry Dock of India (size - 662 m x 65 m) with capacity of more than the combined capacities of all other dry docks in the country including with total Assets of about Rs 10,000 Crore. It has modular and integrated Ship Building Technology; it has the capability to undertake all types of construction / refit / life cycle support of Warships, Submarines, Commercial vessels (including large bulk carriers), Oil & Gas platforms / rigs. Currently, Reliance Shipyard is the only Shipyard in India capable of building a new Aircraft Carrier of 65,000 Ton and above.
Business opportunity of over Rs. 3, 50,000 Crores in Naval in the next 15 years. RDEL has strategic partnerships with the global majors like, DCNS, SAAB, SAFRAN and Thales. It has already made entry in business transactions with some significant breakthrough:-
- The Shipyard is building five Naval Offshore Patrol Vessels (NOPV) for Indian Navy. Reliance Shipyard is the first shipyard to be awarded warship contract by Indian Navy.
- In January 2017, RDEL has signed contracts with Indian Coast Guard to build 14 Fast Patrol Vessels (FPVs).
- The Reliance Shipyard (RDEL) has been selected by U.S. Navy to provide services to its 7th Fleet consisting of more than 100 ships. The Master Ship Repair Agreement (MSRA) has been signed in Jan 2017. The scope includes complex repair and alteration for more than 100 ships of 7th Fleet of U.S. Navy.
This segment focuses on, Small Arms, Ammunition, Artillery Guns, Air Defence Guns, Future Ready Combat Vehicles and Anti Tank Missiles and Upgrading the Armed Vehicles. It is now focussed on creation of ecosystem for Land Systems for Small Arms, Ammunition, Artillery Guns, Air Defence Guns, Future Ready Combat Vehicles and Anti Tank Missiles and Upgrading of Tanks. Army opportunity more than Rs. 6, 00,000 Crores in the next 15 years
The Integrated Security vertical to focus on Border Security, Air field security and security of critical / sensitive installations / assets across the country. The defence Land Systems (primarily supply to Indian and security solutions) opportunity is likely to be approx. Rs. 6, 70,000 Crore in the next 15 years.
Reliance-Rafael (Israel) JV has been incorporated with focus on air defence systems and strategic aerostat solutions.
Defence Systems and Technologies
Reliance Defence Technologies and Systems (RDTS) with focus on common defence technologies / equipments across all the defence segments. Defence Systems and Technology caters to common technology with it's a high value, complex and high technology segment that requires highly skilled intellectual capital for implementation and IPR from global OEMs. Systems and their maintenance contribute higher in the value chain as compared to the platforms.
Indian industry leaders like Tata, L&T and Reliance etc are capable of building system of systems and have the necessary capabilities in most of the segments which if hand held through trust based model can mature to establish the much needed robust and vibrant Defence Industrial Base in the country. The visible change i.e, majority of programs categorised in Buy Indian IDDM, Buy Indian, Buy & Make or Make categories are indicative of the intent to acquire indigenously, has enhanced focus of the OEMs to get into building relationships with competent Indian players and vice versa. What they need is the opportunities with level playing field and focus on export. With own domestic requirement there is a room to create System Integrators in the Private Sector by harnessing such capabilities to transform the Industry, cut dependency and progressively be a part of global defence supply chain.